The global recovery is taking on pre-crisis patterns and premature exit from fiscal expansion could lead to a double-dip recession or, even worse, a deflationary spiral, United Nations Conference on Trade and Development (Unctad) warned today.
“With fiscal austerity spreading throughout Europe and the G-20 consensus on common crisis responses crumbling, the risk of a double-dip recession, or a deflationary spiral, arises,” said Unctad.
The rebound from the crisis will not endure if it continues to be based on temporary factors and if the shortcomings that caused the crisis, like unregulated financial systems, income inequality and global imbalances, persist, Unctad said in the Trade and Development Report 2010.
“The pattern of the recovery is very similar to that of the imbalanced global demand growth during the build-up to the crisis... The situation is far from addressing the issue which stood at the heart of the crisis of 2008,” it said.